When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline.
Trade Alert - (V) –EXPIRATION
EXPIRATION of the Visa (V) August 2021 $220-$225 in-the-money vertical Bull Call spread at $5.00 or best
Closing Trade - NOT FOR NEW SUBSCRIBERS, YOUR TURN WILL COME
8-20-2021
expiration date: August 20, 2021
Portfolio weighting: 10%
Number of Contracts = 24 contracts
Since we are a full $8 in-the-money with this position, I think it is safe to call this one a win. So I am going to run the P&L now so we don’t have too many positions expiring at their maximum profit points at the close today.
Since we added this position, shares of Visa (V) have fallen by $3.29. That is still safely away from the nearest $125.00 strike price for this position.
So, we get to take home the maximum profit in this position, such is the magic of vertical bull call debit spreads.
As a result, you get to take home $1,610, or 16.27% in 12 trading days.
Well done and on to the next trade!
You don’t have to do anything with this expiration.
Your broker (are they still called that?) will automatically use your long position to cover your short position, canceling out the total holdings.
The entire profit will be credited to your account on Monday morning August 23 and the margin freed up.
Some firms charge you a modest $10 or $15 fee for performing this service.
Visa is the quality play in the credit card area, recently growing at the expense of Master Card and American Express. The world is rushing into an all-digital economy and (V) is a major beneficiary.
They also have profited hugely from the move to “touchless” transactions where people are afraid of using physical cash for fear of contracting Covid-19.
This cycle of delta infections is imminently going to peak out and start declining, probably for good.
I think we are about to witness a major rotation into domestic economic “recovery” stocks like Visa, which have been dead in recent months. Stocks will keep going up, but the leadership will change. Bonds are also due for profit-taking.
This was a bet that Visa (V) would not trade below $225.00 by the August 20 option expiration day in 12 trading days.
Here is the specific accounting you need to close out this position:
EXPIRATION of 24 August 2021 (V) $220 calls at…….……$13.55
EXPIRATION of short 24 August 2021 (V) $225 calls at…..$8.55
Net Proceeds:…………………..........…….………..………….….....$5.00
Profit: $5.00 - $4.30 = $0.70
(23 X 100 X $0.70) = $1,610, or 16.27% in 12 trading days.
